Kessock, J. v. Conestoga Title Insurance ( 2018 )

J-S31004-18
2018 Pa. Super. 226
JOHN KESSOCK, JR. : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
CONESTOGA TITLE INSURANCE CO. :
:
: No. 3737 EDA 2017
v. :
:
:
DELANCEY ABSTRACT CORP., :
JOSEPH HOPKINS, LAW OFFICES OF :
HOPKINS AND SCHAFKOPF, LLC, :
SECURITY SEARCH AND ABSTRACT :
CO., INC. :
:
:
APPEAL OF: JOSEPH HOPKINS AND :
DELANCEY ABSTRACT CORP. :
Appeal from the Judgment Entered October 12, 2017
In the Court of Common Pleas of Montgomery County Civil Division at
No(s): No. 2008-17607
BEFORE: SHOGAN, J., LAZARUS, J., and DUBOW, J.
OPINION BY SHOGAN, J.: FILED AUGUST 09, 2018
Joseph Hopkins (“Hopkins”) and Delancey Abstract Corporation
(“Delancey”) (collectively, “Appellants”) appeal the judgment entered against
them.1 We affirm.
____________________________________________
1 Appellants purport to appeal the order denying their motion for post-trial
relief; however, their appeal properly lies from the judgment entered on
October 12, 2017. Tincher v. Omega Flex, Inc., 180 A.3d 386, 396 n.7 (Pa.
Super. 2018). We have amended the caption accordingly.
J-S31004-18
The trial court entered the following findings of fact:
1. This lawsuit arises from a dispute concerning real property
purchased by Plaintiff [John Kessock, Jr.] on or about April 18,
2005, with a physical address of 1333 Beaumont Drive, Gladwyne,
PA 19035 (hereinafter, the “Subject Property”).
2. Defendant Conestoga was the title insurance underwriter for
the Subject Property.
3. Plaintiff’s claim stems from a breach of Conestoga’s
obligations to disclose an easement, as part of its title agency
services, when Plaintiff purchased the Subject Property.
4. The recorded easement was discovered by Plaintiff after the
completion of the sale of the Subject Property.
5. Thereafter, Plaintiff made a title insurance claim with
Conestoga, alleging his claim was worth in excess of $1,000,000.
Conestoga denied the insurance claim.
6. Additional Defendant Delancey, a now non-operating
Pennsylvania corporate entity, was a title insurance broker.
7. Delancey was the title agent who conducted the closing for
the Subject Property.
8. Additional Defendant Hopkins was the principal of Delancey.
9. Security Search and Abstract Company, Inc. (“Security
Abstract”) was the agent hired by Delancey to actually conduct
the title search for the Subject Property.
10. Additional Defendant Hopkins and Schafkopf is a law firm
which provided no services related to this case even though
Hopkins’ name appears in the firm’s name.
11. On April 21, 2004, Conestoga entered into an agency
agreement with Delancey (the “Agency Agreement”).
12. Paragraph 5 of the Agency Agreement provides:
Agent agrees to be solely liable and indemnify Conestoga
for all attorneys’ fees, court costs, expenses and loss or
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aggregate of losses resulting from shortages in its escrow
accounts, fraud, negligence or misconduct of its agents, its
officers, or employees in the issuance of title insurance.
Agent agrees that Conestoga shall have full control of the
determination, procedure and final decision of all losses
including the defense thereof. Conestoga agrees to consult
with Agent prior to making any final decision on losses on
policies issued by Agent.
13. The Agency Agreement was executed under seal by Hopkins
on behalf of Delancey.
14. Also on April 21, 2004, Hopkins executed a “Guaranty of
Payment and Performance” in which Hopkins personally
guaranteed Delancey’s performance of the Agency Agreement,
including “indemnifications and claims of loss as set forth in the
Agency Agreement (the “Guaranty”).
15. The Guaranty was not executed under seal by Hopkins.
Decision with Findings of Fact and Conclusions of Law, 8/17/17, at 2–3.
The trial court summarized the procedural history of this case as follows:
On December 16, 2008 Plaintiff John Kessock, Jr.
(“Plaintiff”) commenced this action by filing a Complaint against
Conestoga Title Insurance Co. (“Conestoga”) and Security
Abstract. On June 12, 2009, an Amended Complaint was filed.
Pursuant to an Order dated January 19, 2010, Security Abstract’s
Preliminary Objections were sustained, and it was dismissed as a
party. Conestoga filed a motion to join Delancey, Hopkins, and the
Law Offices of Hopkins & Schafkopf, LLC (“Hopkins & Schafkopf”)
as additional defendants on May 19, 2011. That motion was
granted on June 5, 2012, entered of record on June 6, 2012.
On November 9, 2016, a two-day non-jury trial on liability
was conducted. In an Order dated November 18, 2016, upon
consideration of the evidence presented, and after granting
Plaintiff’s Motion for Partial Directed Verdict, this [c]ourt ultimately
found in favor of Conestoga and against Plaintiff. Further, on the
crossclaims asserted by Conestoga against Appellants and
Hopkins & Schafkopf, the [c]ourt found in favor of Conestoga and
against Delancey and Hopkins only on its claim for attorney’s fees
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and costs. A compulsory nonsuit/directed verdict was granted to
Hopkins & Schafkopf.
An additional two-day non-jury trial on damages was
conducted beginning on May 1, 2017 on the singular issue of the
assessment of attorney’s fees. On August 17, 2017 this [c]ourt
issued its decision with seventeen pages of findings of fact and
conclusions of law. On October 12, 2017, this [c]ourt denied
Appellant[s’] motion for post-trial relief.
On October 17, 2017 Appellants filed a Notice of Appeal to
this [c]ourt’s October 12, 2017 Order denying Appellant[s’]
motion for post-trial relief.[2] On November 6, 2017, pursuant to
Pennsylvania Rule of Appellate Procedure 1925(b), this [c]ourt
Ordered Appellants to file a concise statement of errors
complained of on appeal within 21 days.
Appellants filed their Concise Statement of Matters
Complained of on Appeal on November 27, 2017. In their Concise
Statement, Appellants claim, in more specific detail, that the trial
court erred in: (1) allowing the joinder of [A]ppellants, (2) not
finding in favor of Appellants, and (3) the [c]ourt’s calculation of
attorney’s fees.
Trial Court Opinion, 12/1/17, at 1–2.
On appeal, Appellants present the following questions for our review:
A. Appellee Conestoga Title Insurance Company filed two
successive motions to join Appellants Joseph Hopkins and
Delancey Abstract Corporation as additional defendants, filed
431 days and 1,270 days after the joinder period of Pa.R.C.P.
No. 2253 expired. And Conestoga’s attorneys falsely
represented to the Trial Court in both motions that they had
just discovered Hopkins’ and Delancey’s potential liability.
Did the Trial Court abuse its discretion in granting the joinder
motions?
B. Appellant Joseph Hopkins gave a contract-based personal
guaranty that Delancey Abstract Corporation would perform
its Agency Agreement with Conestoga and would indemnify
____________________________________________
2 As explained in note 1, the appeal is properly from the entry of judgment.
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Conestoga for attorneys’ fees if Delancey was negligent in
issuing title insurance on Conestoga’s behalf. Conestoga did
not file its complaint against Hopkins alleging breach of the
guaranty until five years after it learned of its contractual
claim against Hopkins[.] Did the Trial Court err in concluding
that Conestoga’s claims against Hopkins were not barred by
the statute of limitations?
C. Did the Trial Court err in refusing to reduce the attorneys’
fees chargeable to Hopkins and Delancey as unreasonable for
any or all of the following reasons:
a. Conestoga litigated for eight years without ever
ascertaining the amount of money in dispute;
b. Conestoga denied liability and the existence of a
contractual relationship between Plaintiff John
Kessock and Conestoga for eight years of
litigation, only to admit contractual liability at
trial;
c. The time entries of the attorneys admitted into
evidence were recorded recollections requiring
the testimony of the declarant at trial, but two of
the three attorneys did not testify at trial;
d. Delancey did not agree to indemnify Conestoga
for attorneys’ fees related to enforcing the
Agency Agreement, yet the judgment requires
Hopkins and Delancey to indemnify Conestoga for
those charges; and
e. Attorney Mark Clemm charged $175 per hour for
his daughter’s time before she was admitted to
practice law in Pennsylvania, which is the same
rate charged after her admission to practice?
Appellants’ Brief at 3–4.
Appellants first complain that the trial court abused its discretion by
granting Conestoga’s untimely motions to join Appellants as additional
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defendants. Appellants’ Brief at 14. We have explained the joinder procedure
as follows:
The Pennsylvania Rules of Civil Procedure provide that a writ
for joinder shall be filed by the original defendant or an additional
defendant no later than sixty (60) days after effecting service
upon the original defendant of the initial pleading of the plaintiff
or any amendment thereof “unless such filing is allowed by the
court upon cause shown.” Pa.R.C.P. 2253, Time for Filing
Praecipe or Complaint. Whether there is sufficient cause to
allow late joinder of an additional defendant is a matter within the
sound discretion of the trial court. Mutual Industries, Inc. v.
Weinberg, 423 Pa.Super. 328, 621 A.2d 140, 143 (1993).
Nevertheless, the court “should be guided by the objectives
sought to be achieved by use of the additional defendant
procedure.” Zakian v. Liljestrand, 438 Pa. 249, 256, 264 A.2d
638, 641 (1970). Joinder should be granted when it can “simplify
and expedite the disposition of matters involving numerous
parties without subjecting the original plaintiff to unreasonable
delay in the prosecution of his portion of the litigation.” Id.
(citations omitted).
When requesting the belated joinder of an additional
defendant, a party must show (1) that joinder is based on proper
grounds, (2) that some reasonable excuse exists for the delay in
commencing joinder proceedings, and (3) that the original plaintiff
will not be prejudiced by the late joinder. Francisco v. Ford
Motor Co., 406 Pa.Super. 144, 593 A.2d 1277, 1278 (1991). This
Court has also considered the potential for prejudice to the
proposed additional defendant. Prime Properties Development
Corp. v. Binns, 397 Pa.Super. 492, 580 A.2d 405 (1990).
However, limitations on joinder are primarily intended to protect
a plaintiff from being unduly delayed in prosecuting his action.
See Zakian, 438 Pa. at 256, 264 A.2d at 641[.]
Lawrence v. Meeker, 717 A.2d 1046, 1048–1049 (Pa. Super. 1998) (some
internal citations omitted). “The rule permitting the joinder of additional
defendants is to be broadly construed to effectuate its purpose of avoiding
multiple lawsuits by settling in one action all claims arising out of the
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transaction or occurrence which gave rise to the plaintiff’s complaint.” 202
Island Car Wash, L.P. v. Monridge Const., Inc., 913 A.2d 922, 926 (Pa.
Super. 2006) (quoting Svetz for Svetz v. Land Tool Co., 513 A.2d 403, 405
(Pa. Super. 1986) (citation omitted)).
According to Appellants, Conestoga filed its first joinder motion sixteen
months after the ninety-day joinder period had closed; it offered no credible
justification for the delay in filing the motion; and it misrepresented when
Conestoga knew of Appellants’ liability under the Agency Agreement and
Guaranty. Appellants’ Brief at 19. Furthermore, Appellants contend that
Conestoga filed its second joinder motion three and one-half years after the
joinder period had closed; it offered no credible justification for the delay in
filing the motion; and it again misrepresented when Conestoga knew of
Appellants’ liability. Id. at 20–21.
In response, Conestoga argues that only the plaintiff in the underlying
action, John Kessock, Jr. (“Kessock”), could object to a late joinder on the
ground that Conestoga failed to provide a reasonable excuse for its delay.
Conestoga’s Brief at 10 (citing Pa.R.C.P. 2253(b)). According to Conestoga,
although Kessock objected to the first and second proposed joinder complaints
due to the lack of reasonable delay, he did not file a post-trial motion or appeal
the joinder of Appellants. Id. at 13–17. As for Appellants, Conestoga
recognizes that they could object to joinder on grounds of prejudice. Id. at
10. Conestoga points out, however, that although Appellants objected to the
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first joinder motion, they did not object to the second joinder motion;
moreover, Appellants “have neither pled nor proven any aspect of legal
prejudice, such as the loss of witnesses, the loss of documents, etc.” Id. at
17. Conestoga explains it could have filed a separate action against Appellants
and moved for consolidation of the cases, but that “would have been a waste
of judicial time and effort, as the same result would have been accomplished
by simply joining [Appellants].” Id. Conestoga concludes that the trial court
properly allowed joinder for “purposes of judicial economy.” Id. at 18.
The trial court entered the following findings of fact relevant to
Conestoga’s joinder motions:
19. Conestoga’s first attorney, David Henry, filed a motion to join
Delancey, Hopkins, and Hopkins & Schafkopf as additional
defendants on May 19, 2011.
20. That motion was granted on June 5, 2012, entered of record
on June 6, 2012.
* * *
24. On November 15, 2012, the [c]ourt . . . provided that
Conestoga shall have 30 days from the date of notice of that
Order to file a Third Party Complaint to join Additional
Defendants. The [c]ourt also noted in its Order that the Order
shall be served upon Conestoga’s attorney of record, David
Henry, Esquire, at his address currently reflected on the
docket, 444 N. 4th Street, Suite 101, Philadelphia, PA 19122,
and at the address reflected in the Certificate of Service of
the second Motion for Reconsideration, 20 N. 3rd Street Suite
301-B, Philadelphia, PA 19106.
25. This docket reflects that attempted service of the [c]ourt’s
November 15, 2012 Order upon Conestoga’s prior attorney,
David Henry, Esquire, at the two above addresses were
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returned as undeliverable and provided no forwarding
information.
26. Concomitantly with the [c]ourt’s unsuccessful attempts at
serving notice of the [c]ourt’s Orders upon defendant
Conestoga’s prior attorney, David Henry, Esquire, he became
unreachable to Conestoga and ceased communication with
Conestoga.
27. Conestoga retained Attorney Mark Clemm, Esquire (“Mr.
Clemm”) and his firm sometime in late 2012 or early 2013.
Mr. Clemm’s first entry in this case was March 25, 2013.
28. Conestoga was unaware of the [c]ourt’s November 15, 2012
Order granting Conestoga 30 days from the date of notice of
that Order to file a Third Party Complaint to join Additional
Defendants, until approximately April 2013 after Conestoga
retained Mr. Clemm who had reviewed the docket and
discovered the [c]ourt’s November 15, 2012 Order.
29. On August 2, 2013, Conestoga filed a motion to join Additional
Defendants Delancey, Hopkins . . . “nunc pro tunc.”
30. Based on the foregoing, on December 11, 203, this [c]ourt
granted Conestoga’s Motion for Leave to Join Additional
Defendants nunc pro tunc.
31. On December 17, 2013, Conestoga filed its Joinder Complaint.
32. Neither Delancey nor Hopkins filed Preliminary Objections to
their joinder.
Decision with Findings of Fact and Conclusions of Law, 8/17/17, at 3–5. As
evidenced by its order allowing joinder, the trial court accepted Conestoga’s
justification for the untimely motions, although the trial court did not provide
any conclusions of law. Decision with Findings of Fact and Conclusions of Law,
8/17/17, at 11–17.
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Pursuant to Pa.R.C.P. 2252(a)(4), joinder is permissible if the additional
defendant may be liable to the joining party on any cause of action arising out
of the transaction upon which the plaintiff’s cause of action is based. Here,
Kessock’s cause of action against Conestoga arose out of the omission of an
easement from the title search. Conestoga sought joinder of Appellants based
on Appellants’ liability for the overlooked easement pursuant to the Agency
Agreement and the Guaranty. Joinder Complaint, 12/17/13, at ¶¶ 14–20;
Counts I, II, and III. We conclude, therefore, that Conestoga’s joinder request
was appropriate.
Conestoga justifies its delay in filing the joinder motions as the result of
not knowing that Kessock “had a direct claim against [Appellants] until
Conestoga discovered the relationship between Hopkins and Kessock and that
Hopkins provided legal advice as well as title services (through Delancey) to
[Kessock].” Conestoga’s Brief at 12. Conestoga also cites its inability to
contact counsel, Attorney David Henry, as a cause of the delay in filing the
joinder complaint. Id. at 13. In contrast, Appellants assert that Conestoga
did not have a reasonable excuse for the delayed joinder because it knew at
the beginning of the underlying litigation—if not before—that Appellants faced
potential liability under the Agency Agreement and the Guaranty. Appellants’
Brief at 19. In support of their position, Appellants direct us to several
instances in the record demonstrating Conestoga’s knowledge of Appellants’
potential liability. Id. at 21–23.
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Upon review, we find support in the record for the trial court’s credibility
determination that Attorney Henry’s unreachability provided an excuse for
Conestoga’s untimely filing of the second joinder motion in August of 2013.
Attorney Henry became unreachable after the November 15, 2012 order
directing Conestoga to file a joinder complaint. N.T., 5/1/17, at 76, 93–94.
Consequently, the court-approved joinder complaint was not filed until new
counsel, Attorney Mark Clemm, renewed the joinder motion in August of 2013.
Conversely, we do not find support in the record for the trial court’s
credibility determination that Conestoga provided a reasonable excuse for its
delay in filing the first joinder motion in May of 2011. Rather, the record
supports Appellants’ claim that Conestoga knew of Appellants’ potential
liability under the Agency Agreement and the Guaranty prior to receiving
complete discovery responses from Kessock. Indeed, the trial court found—
and our review of the record confirms—that Conestoga and Delancey executed
the Agency Agreement on April 21, 2004; therein, Delancey obligated itself to
reimburse Conestoga for damages, attorney’s fees, and costs arising out of
Delancey’s negligence. On the same date, Conestoga and Hopkins executed
the Guaranty, in which Hopkins personally guaranteed Delancey’s
performance of the Agency Agreement. Decision with Findings of Fact and
Conclusions of Law, 8/17/17, at ¶¶ 11–15, 77. When Kessock filed his lawsuit
on December 16, 2008, therefore, Conestoga knew that Appellants could be
liable to Conestoga for attorney’s fees and damages depending upon the
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outcome of Kessock’s litigation. Thus, we conclude that Conestoga filed its
first joinder motion out of time and lacked a reasonable excuse for the delay.
Nevertheless, we discern no prejudice resulting from the trial court’s
grant of Conestoga’s late joinder motions. The record reveals that, although
Kessock objected to Conestoga’s untimely joinder motions, it did not challenge
the joinder in post-trial motions or an appeal. As for Appellants, they have
not argued in this Court, let alone demonstrated, how Conestoga’s untimely
motions caused them prejudice.
Moreover, in Pennsylvania, “[i]t is well established that before
indemnification rights accrue, the party seeking indemnification must pay the
claim or verdict damages before obtaining any rights to pursue an
indemnification recovery.” Chester Carriers, Inc. v. Nat’l Union Fire Ins.
Co. of Pittsburgh, 767 A.2d 555, 563 (Pa. Super. 2001) (quoting Beary v.
Container General Corp., 4, 193 (Pa. Super. 1989)). See also F.J.
Schindler Equipment Company v. Raymond Company, 418 A.2d 533,
534 (Pa. Super. 1980) (“It is clear that before the right of indemnification
arises, the indemnitor must in fact pay damages to a third party. Any action
for indemnification before such payment ... is premature.”). Procedurally,
when Conestoga moved to join Appellants in May of 2011 and August of 2013,
it had not paid any damages to Kessock; therefore, the statute of limitations
on its potential claims against Appellants for indemnity on damages paid to a
third party had not started to run, let alone expire. F.J. Schindler, 418 A.2d
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at 534. Consequently, the timing of the joinder motions did not delay any
litigation arising out of the indemnification provisions of the Agency
Agreement and the Guaranty. Based on the foregoing, we conclude that the
trial court did not abuse its discretion in allowing the late joinder of Appellants.
In their second issue, Appellants argue that the four-year statute of
limitations set forth in 42 Pa.C.S. § 5525(a) barred Conestoga’s claim against
Hopkins.3 Appellants’ Brief at 25. According to Appellants:
Hopkins’ duty to guaranty Delancey’s performance of the Agency
Agreement does not arise under common law. Rather, Hopkins’
____________________________________________
3 Appellants do not challenge the timeliness of Conestoga’s claim against
Delancey, nor could they. Based on its findings of fact, which are supported
by the record, the trial court concluded—and we agree—that Conestoga filed
its joinder complaint against Delancey within the relevant limitations period:
11. On April 21, 2004, Conestoga entered into an agency
agreement with Delancey (the “Agency Agreement”).
* * *
13. The Agency Agreement was executed under seal by Hopkins
on behalf of Delancey.
* * *
85. The statute of limitations for a written contract signed under
seal is twenty years. Osprey Portfolio, LLC v. Izett, 32 A.3d
793 (Pa. Super. 2011).
* * *
87. Therefore, the cross-claim brought by Conestoga against
Delancey was clearly within the 20-year statute of limitations.
Decision with Findings of Fact and Conclusions of Law, 8/17/17, at 2–3, 12–
13.
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duty to indemnify Conestoga for its attorneys’ fees can arise only
under his contractual promise to “guaranty the full performance
of the Agency Agreement by the Agent”.
* * *
Logically, for Conestoga to assert a right to indemnity from
Hopkins under the Guaranty, Conestoga must assert a claim
against Delancey for breach of the Agency Agreement—that is all
that Mr. Hopkins guaranteed. Thus, as a matter of law, Conestoga
was required to file its complaint against Mr. Hopkins personally
for breach of the Guaranty by December 16, 2012—four years
after Kessock served his complaint on Conestoga and Conestoga
admits to knowing the identity of Delancey as the agent in that
transaction.
Appellants’ Brief at 26–27 (citation to Reproduced Record and footnote
omitted).
Conestoga does not challenge the application of a four-year statute of
limitations; it challenges when the statute began to run. Specifically,
Conestoga argues that its claim against Appellants ripened—and the statute
began to run—on November 10, 2016, when the trial court determined in
Conestoga’s cross-claim action that “Delancey was negligent in the issuance
of title insurance.” Conestoga’s Brief at 19. Thus, in Conestoga’s view, its
December 17, 2013 joinder complaint against Appellants was filed within the
statute. We agree.
The applicability of a statute of limitations is a question of law; therefore,
our scope of review is plenary, and our standard of review is de novo. Ash v.
Continental Ins. Co., 932 A.2d 877, 879 (Pa. 2007). “The trial court’s
determination will not be disturbed absent an abuse of [its] discretion.” Id.
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“Pennsylvania favors strict application of the statutes of limitation.”
Wachovia Bank, N.A. v. Ferretti, 935 A.2d 565, 572 (Pa. Super. 2007)
(citation omitted). “Lack of knowledge, mistake or misunderstanding, will not
toll the running of the statute.” Id. at 572 (citation omitted). A statute of
limitations begins to run “from the time the cause of action accrued.” 42
Pa.C.S. § 5502(a). “In a contract case, a cause of action accrues when ‘there
is an existing right to sue forthwith on the breach of contract.’” Leedom v.
Spano, 647 A.2d 221, 226 (Pa. Super. 1994) (quoting Thorpe v.
Schoenbrun, 195 A.2d 870, 872 (Pa. Super. 1963), and citing 51 Am.Jur.2d,
Limitation of Actions § 107 (cause of action accrues the moment the right to
commence an action comes into existence)).
According to the trial court, Hopkins executed the Guaranty on April 21,
2004, “in which Hopkins personally guaranteed Delancey’s performance of the
Agency Agreement,” and “[t]he Guaranty was not executed under seal.”
Decision with Findings of Fact and Conclusions of Law, 8/17/17, at ¶¶ 14, 15.
On May 10, 2005, Security Abstract received a search order from Delancey to
perform a title search of the Subject Property and negligently failed to disclose
a driveway easement. Id. at ¶ 38. On June 30, 2005, Delancey, as an agent
of Conestoga, prepared a title insurance commitment regarding the Subject
Property for $1,799,000. Id. at ¶ 39. Conestoga underwrote a title insurance
policy to Kessock for the Subject Property on July 12, 2005. Id. at ¶ 40.
Kessock learned about the undisclosed easement in November of 2005, and
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he filed suit against Conestoga and Security Abstract on December 16, 2008.
Id. at ¶¶ 16, 41. Our review of the record confirms the trial court’s findings.
N.T., 11/9/16, at 22, 56, 121–123, 127–130, Exhibits P-9, P-10, P-12, P-13,
D-7.
Based on its findings of fact, the trial court entered the following relevant
conclusions of law regarding when Conestoga’s cause of action against
Hopkins arose:
84. The statute of limitations for a written contract not signed
under seal is four years. Packer Soc. Hill Travel Agency, Inc.
v. Presbyterian University of Pennsylvania Medical Center,
635 A.2d 649 (Pa. Super. 1993).
* * *
88. The Guaranty, however, was not signed under seal and is
therefore subject to the four-year statute of limitations.
89. In Leedom v. Spano, the Superior Court provided guidance
on when a cause of action against a guarantor accrues.
Leedom v. Spano, 647 A.2d 221, 225 (Pa. Super. 2016). In
Leedom, a mortgagor defaulted on a mortgage note to which
a third party acted as surety. Id. The Superior Court noted
that upon default on a mortgage note by the principal “both
the principal and the surety become liable on the original
undertaking.” Based on that fact, the Court held that the
statute of limitations began to run against both the principal
and the surety at the time of the mortgagor’s default. Id.
Thus, according to Leedom, a cause of action begins to run
against a surety at the same time the cause of action begins
to run against the principal. Therefore, to determine when
the statute of limitations began to run against Hopkins under
the Guaranty, we must first determine when the statute of
limitations began to run against Delancey under the Agency
Agreement.
90. The Agency Agreement provided that Delancey would “be
solely liable and indemnify Conestoga for all attorney’s
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fees…resulting from…fraud, negligence or misconduct of its
agents, its officers, or employees in the issuance of title
insurance.” Claims for indemnification arise only when the
party seeking indemnity has made payment on the underlying
claim. McClure v. Deerland Corp., 585 A.2d 19, 22 (Pa.
Super. 1991). “The right of indemnity rests upon a difference
between the primary and secondary liability of two persons
each of whom is made responsible by the law to an injured
party.” F.J. Schindler Equip. Co. v. Raymond Co., 418 A.2d
533, 533 (Pa. Super. 1980)(citing Builder’s Supply Co. v.
McCabe, 77 A.2d 362, 370 (Pa. 1951)[)]. Any action for
indemnification before payment of damages to a third party
is premature. Id. See also Beary v. Container Gen. Corp.,
568 A.2d 190, 193 (Pa. Super. 1989)(“It is well established
that before indemnification rights accrue, the party seeking
indemnification must pay the claim or verdict damages before
obtaining any rights to pursue an indemnification[.]).
91. At the earliest, the cause of action for indemnification as set
forth in the Agency Agreement did not accrue until the [trial
c]ourt determined that Delancey was negligent in its issuance
of title insurance and also determined the amount of damages
or loss for which Conestoga was liable to Kessock. Under the
Leedom decision, the cause of action against Hopkins did not
accrue until that time as well.
92. The [trial c]ourt did not make its determination on liability
until it granted [Kessock’s] Motion for a Partial Directed
Verdict on November 10, 2016, finding that Delancey was
negligent in the issuance of title insurance. Therefore, since
a claim for indemnification arises only after verdict damages
have been established, the statute of limitations on the claims
against Hopkins begin to run no earlier than November 10,
2016.
93. Accordingly, Conestoga’s claims against Hopkins were
brought well within the four-year statute of limitations.
Decision with Findings of Fact and Conclusions of Law, 8/17/17, at 12–14.
We have explained that a cause of action against a surety begins to run
at the same time the cause of action begins to run against the principal.
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Leedom, 647 A.2d at 225. Accordingly, we agree with the trial court’s
conclusion that Conestoga’s cause of action against Hopkins arose at the same
time its cause of action against Delancey arose. Decision with Findings of Fact
and Conclusions of Law, 8/17/17, at ¶ 89. Therefore, as recognized by the
trial court, the determining factor is when Conestoga’s cause of action against
Delancey arose. Id.
Preliminarily, we note there are two types of indemnity:
[I]ndemnity claims by a plaintiff against a defendant, where both
owe a duty to a third party, are “legitimate” indemnity claims and
are new, separate claims for statute of limitations purposes and
accrue when the loss occurs. However, indemnity claims by a
plaintiff against a defendant based only on the defendant’s alleged
breach of a contractual duty owed to the plaintiff, where the
defendant owes no duty to a third party, are no different from
breach of contract claims in which the plaintiff’s payments to the
third party are the contract damages, and therefore, the ordinary
contractual statute of limitations applies, and the claims accrue at
breach, not at the time of payment.
R. Gottlieb and B. Natarelli, Ace in the Hole: Developments Since Ace
Securities in Residential Mortgage-backed Securities Litigation, 72 Bus. Law.
585 (Spring 2017) (citation omitted).
The case at hand involves the second type of indemnification, i.e.,
Conestoga sought reimbursement from Delancey based only on Delancey’s
obligations to Conestoga under the Agency Agreement. Decision with Findings
of Fact and Conclusions of Law, 8/17/17, at ¶ 90. In Conestoga’s words, “The
applicable Agency Agreement constituted a binding contract between
Conestoga and Delancey Abstract.” Joinder Complaint, 12/17/13, at ¶ 35.
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This case also involves two components of indemnification arising out of
Delancey’s negligence: damages payable to a third party and attorney’s fees
and court costs. Agency Agreement, 4/21/04, at ¶ 5.
Opining that “a claim for indemnification arises only after verdict
damages have been established,” the trial court concluded that the statute of
limitations against Delancey began to run “no earlier than November 10,
2016,” when the trial court found “Delancey was negligent in the issuance of
title insurance.” Id. at ¶¶ 91–92. However, as stated above, “before
indemnification rights accrue, the party seeking indemnification must pay the
claim or verdict damages before obtaining any rights to pursue an
indemnification recovery.” Beary, 568 A.2d at 193; Chester Carriers, 767
A.2d at 563. Although the trial court found Conestoga liable to Kessock for
breach of contract, it also found that Kessock “failed to present sufficient
competent and credible evidence . . . that he suffered any damages pursuant
to that breach.” Decision with Findings of Fact and Conclusions of Law,
8/17/17, at ¶ 77, 78. Therefore, Conestoga’s indemnification rights against
Delancey for damages payable to a third party did not accrue because
Conestoga did not pay any damages to Kessock.
As for Conestoga’s claim against Delancey for attorney’s fees and court
costs, it accrued according to the fee-shifting language of the Agency
Agreement. The relevant language of the Agency Agreement provides that
Delancey would be solely liable to Conestoga for all attorney’s fees and court
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costs resulting from the negligence of Delancey’s agents, officers, or
employees in the issuance of title insurance. Agency Agreement, 4/21/04, at
¶ 5. Necessarily, in order for Delancey to be liable for attorney’s fees and
costs resulting from its negligence, there must be a finding that Delancey
was negligent. In this case, that finding occurred when the trial court ruled
in favor of Conestoga on its cross-claim against Appellants. N.T., 11/10/16,
at 76. Accordingly, we agree with the trial court that Conestoga’s cause of
action against Delancey arose on November 10, 2016, with the finding of
Delaney’s negligence in issuing the title insurance. Decision with Findings of
Fact and Conclusions of Law, 8/17/17, at ¶¶ 77, 91–92. Consequently,
Conestoga’s claim against Hopkins under the Guaranty arose at the same
time. Leedom, 647 A.2d at 225.
Hopkins signed the Guaranty, not under seal, on April 21, 2004.
Decision with Findings of Fact and Conclusions of Law, 8/17/17, at ¶¶ 14, 15.
The statute of limitations for a contract not under seal is four years. 42 Pa.C.S.
§ 5525. Accordingly, Conestoga had to file suit against Hopkins pursuant to
the Guaranty within four years of the finding of Delancey’s negligence, i.e., on
or before November 10, 2020. Conestoga filed its joinder complaint on
December 17, 2013, well before the statute of limitations began to run, let
alone expire. Thus, we discern no error in the trial court’s conclusion that
“Conestoga’s claims against Hopkins were brought well within the four-year
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statute of limitations.” Decision with Findings of Fact and Conclusions of Law,
8/17/17, at ¶ 93.
Appellants’ third and final issue challenges the trial court’s refusal to
reduce the award of $68,887.45 as reasonable attorney’s fees and costs to
Conestoga on its cross-claim against Appellants. Appellants’ Brief at 30;
Decision with Findings of Fact and Conclusions of Law, 8/17/17, at ¶¶ 94–103.
Appellants argue that the amount awarded was unreasonable because: (1)
Conestoga litigated the dispute for eight years without ascertaining the
amount of money in dispute; (2) Conestoga litigated the dispute for eight
years only to admit contractual liability at trial; (3) the trial court failed to
exclude inadmissible hearsay about attorney charges for individuals who did
not testify; (4) the trial court failed to exclude charges related to enforcing
the Agency Agreement; and (5) the trial court failed to exclude amounts billed
as attorney’s fees for work done by a paralegal. Appellants’ Brief at 31–39.
“Our standard of review of an award of attorney[’s] fees is well settled:
we will not disturb a trial court’s determinations absent an abuse of discretion.
A trial court has abused its discretion if it failed to follow proper legal
procedures or misapplied the law.” Miller v. Miller, 983 A.2d 736, 743 (Pa.
Super. 2009) (internal citation omitted). The default rule in Pennsylvania is
that litigants bear responsibility for their own costs and attorney’s fees in the
absence of express statutory authorization for fee awards, contractual fee-
shifting, or some other recognized exception. Herd Chiropractic Clinic, P.C.
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v. State Farm Mut. Auto. Ins. Co., 64 A.3d 1058, 1062 (Pa. 2013).4 “[T]he
interpretation of the terms of a contract is a question of law for which our
standard of review is de novo, and our scope of review is plenary.” McMullen
v. Kutz, 985 A.2d 769, 773 (Pa. 2009) (citation omitted). Our Supreme Court
has held:
The facts and factors to be taken into consideration in determining
the fee or compensation payable to an attorney include: the
amount of work performed; the character of the services
rendered; the difficulty of the problems involved; the importance
of the litigation; the amount of money or value of the property in
question; the degree of responsibility incurred; whether the fund
involved was “created” by the attorney; the professional skill and
standing of the attorney in his profession; the results he was able
to obtain; the ability of the client to pay a reasonable fee for the
services rendered; and, very importantly, the amount of money
or the value of the property in question.
Id. at 774 (quoting In re Estate of LaRocca, 246 A.2d 337, 339 (Pa. 1968)).
Here, Delancey and Conestoga included a fee-shifting provision in the
Agency Agreement. Agency Agreement, 4/21/04, at ¶ 5. Following a two-
day bench trial on Conestoga’s cross-claim for attorney’s fees, the trial court
entered the following findings of fact:
48. At the assessment of damages phase of the trial, Conestoga
presented the testimony of William Parker, Esquire (“Mr.
Parker”), in-house counsel for Conestoga.
49. The testimony of Mr. Parker was credible and accepted by the
[c]ourt.
____________________________________________
4 This rule is known as the “American Rule.” Trizechahn Gateway LLC v.
Titus, 976 A.2d 474, 482–483 (Pa. 2009).
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50. Mr. Parker commenced employment with Conestoga in 2009,
shortly after this civil action was commenced. He was
principally responsible for managing the matter which is the
subject of this litigation, including supervising outside counsel
working on behalf of Conestoga.
51. Mr. Parker has hired outside counsel to represent Conestoga
and its insureds in connection with multiple claims throughout
Pennsylvania, and also specifically in Montgomery County,
Pennsylvania on multiple occasions. He is familiar with the
rates charged by attorneys in the region, which vary based
upon their level of experience and familiarity with these types
of cases.
52. Mr. Clemm and the firm of Morris and Clemm, P.C.
commenced their representation of Conestoga in March,
2013. Thereafter, the name of Mr. Clemm’s law firm changed
to Morris, Clemm and Wilson, P.C. Thereafter, Mr. Clemm
withdrew from that firm and started a new firm known as
Clemm and Associates, LLC. Mr. Clemm and the law firms
with which he was associated continuously represented
Conestoga in this case from March, 2013 to the present.
53. For this claim, Mr. Parker and other principals of Conestoga
reviewed, approved of, and paid the bills for legal fees and
costs submitted by Mr. Clemm and his associates.
54. Mr. Parker was Mr. Clemm’s primary contact at Conestoga,
and Mr. Clemm provided Mr. Parker with copies of pleadings,
correspondence and other documents generated and/or filed
in connection with this case.
55. Mr. Clemm and/or members of his firm also provided Mr.
Parker with updates concerning the status of the litigation and
had discussions with Mr. Parker concerning strategy to be
utilized in this case.
56. At the time that Mr. Clemm and his firm commenced
representation of Conestoga in this matter, Mr. Parker
negotiated a reduction in Mr. Clemm’s customary hourly rate
from $400 to $300 per hour.
57. However, in Mr. Clemm’s first 5 time entries billed to
Conestoga, Mr. Clemm billed his time at $350 per hour for a
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total of 12.2 hours and at $375 for a total of 3 hours. That
constitutes a total of $632.50 above what Conestoga would
have paid had Mr. Clemm charged the negotiated rate of $300
per hour.1
1 These amounts are calculated from Slip IDs
117960, 118081, 120152, 120984, and 121188 on
Trial Exhibit D-9.
58. Joshua Knepp, Esquire, worked as an associate for Mr. Clemm
and provided services to Conestoga in connection with this
case. Mr. Knepp’s time was charged at the rate of $275 per
hour, which was an hourly rate approved by Mr. Parker and
Conestoga.
59. During the time that Mr. Clemm worked on the case for
Conestoga, Katie M. Clemm also worked on the case. After
her graduation from law school, but before she was admitted
to practice in the [Commonwealth] of Pennsylvania, her time
was charged at the rate of $175 per hour, a rate acceptable
to Mr. Parker and Conestoga as reflecting a reasonable rate
charged by a senior, highly experienced paralegal. After Katie
M. Clemm, Esquire was admitted to practice in the
Commonwealth of Pennsylvania, her rate remained the same
at $175 per hour, which was an hourly rate acceptable to Mr.
Parker and Conestoga as reflecting a reasonable rate charged
by a young associate with her level of experience.
60. Mr. Clemm testified concerning the services provided by him
and his associates in connection with the representation of
Conestoga in this case, including preparing and serving
various forms of written discovery; reviewing, analyzing and
summarizing responses to written discovery which had been
served; preparing, filing and serving various pleadings,
motions and briefs in support of same; responding to various
pleadings, motions and briefs filed by other parties in the
case; performing and/or reviewing legal research at various
times; identifying, communicating with and preparing various
expert witnesses for trial; and preparing for and conducting
the trial in this case.
61. The testimony of Mr. Clemm was credible and was accepted
by the [c]ourt.
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62. After Mr. Clemm entered his appearance for Conestoga in this
case on July 15, 2013, there were over 90 docket entries
which reflected pleadings, orders and other matters filed in
this case which required Mr. Clemm’s participation and/or
attention.
63. For the period from March 25, 2013 through and including
March 31, 2017, Mr. Clemm and the associates who worked
with him on this case billed a total of $62,669.95 in attorneys’
fees and costs, as reflected on Trial Exhibit D-9.
64. Mr. Clemm and his associates billed additional legal fees of
$6,850 to prepare for and conduct the damages phase of the
trial which occurred on May 1, 2017 and May 2, 2017.
65. The total legal fees and costs billed by Mr. Clemm and his
associates through May 2, 2017 amounted to $69,519.95.
66. Hopkins and Delancey did not produce any fact witnesses or
otherwise provide any evidence which challenged the
reasonableness and necessity of the attorney’s fees and costs
billed by Mr. Clemm and his associates in connection with the
representation of Conestoga in this case, instead relying
entirely on their cross-examination of Mr. Parker and Mr.
Clemm.
67. Hopkins and Delancey sought to call Keith Lipman, Esquire, as
an expert witness to challenge the reasonableness and
necessity of all attorney’s fees and costs billed by Mr. Clemm
and his associates in connection with the representation of
Conestoga in this case.
68. For the last 17 years, Mr. Lipman worked as an information
technology consultant seeking to assist law firms (especially
large law firms) in work efficiency, cyber security, and
practice management.
69. Mr. Lipman practiced law for approximately three years from
1994 through 1997 as a labor relations associate. Mr. Lipman
has not practiced law since 1997.
70. Mr. Lipman has never reviewed or analyzed the hourly rates
charged by attorneys in Montgomery County, Pennsylvania
and specifically is not aware of rates charged by attorneys in
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Montgomery County, Pennsylvania, nor is he aware of rates
charged by attorneys who defend title insurance companies
in cases like the present matter.
71. Mr. Lipman has never conducted an audit of a law firm’s bills
to assess their reasonableness.
72. Mr. Lipman’s office is located in the building owned by
Hopkins, and he agreed to provide his testimony gratis as a
favor to Hopkins.
73. Hopkins and Delancey asserted that Mr. Lipman’s testimony
could assist the [c]ourt in identifying instances of block
billing. However, Mr. Lipman was not permitted to testify as
an expert because he had no specialized knowledge which
would reasonably assist the [c]ourt as the trier of fact in this
case.
Decision with Findings of Fact and Conclusions of Law, 8/17/17, at 7–11.
Based on its findings of fact, the trial court entered the following
conclusions of law:
101. The hourly rates charged by Mr. Clemm and his associates
were consistent with rates charged by other lawyers in
Montgomery County, Pennsylvania who provide similar
types of legal services in similar types of cases.
102. The legal fees and costs billed by Mr. Clemm and his
associates were necessary in order to defend Conestoga
against the claims made by Kessock and in order to plead
and prove the claims made by Conestoga against Delancey
for recovery of attorney’s fees and costs incurred by
Conestoga.
103. The amount of $69,519.95 billed by Mr. Clemm and his
associates is reasonable less the $632.50 Mr. Clemm billed
above his negotiated rate of $300 per hour.3, 4 Delancey is
obligated to pay Conestoga the sum of $68,887.45 to
reimburse Conestoga for the reasonable attorney’s fees and
costs incurred by Conestoga in this case.
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3 After nitpicking Mr. Clemm’s bills in ways not
supported by common sense or case law, Delancey
asserted that Conestoga should only recover
$4,067.25 in attorney’s fees. That is, [Appellants]
argued that the reasonable rate for a law firm to
represent a client for over four years and
successfully through trial was only slightly more than
$1,000 per year of representation. The [c]ourt need
say no more regarding the absurdity of this
assertion.
4 Delancey asserts that the test laid out in Neal v.
Bavarian Motors, Inc., 882 A.2d 1022, 1032 (Pa.
Super. 2005) is applicable to this case. Neal lays out
the facts which should be considered when assessing
the reasonableness of counsel fees “in a case
involving a lawsuit which includes claims under the
UTPCPL (the Unfair Trade Practices and Consumer
Protection Law).” The factors are: “(1) The time and
labor required, the novelty and difficulty of the
questions involved and the skill requisite properly to
conduct the case; (2) The customary charges of the
members of the bar for similar services; (3) The
amount involved in the controversy and the benefits
resulting to the clients from the services; and (4)
The contingency or certainty of the compensation.”
The present matter obviously does not fall under the
UTPCPL. Moreover, the party who could recover
attorney’s fees under the UTPCPL would by necessity
always be the Plaintiff. Therefore, the fourth factor
clearly makes no sense in the context of a defendant
requesting attorney’s fees under a contractual
provision. The third factor is arguably irrelevant as
well since the defendant has no control over having
been sued. The defendant cannot simply drop a
case, even if it deems the amount in controversy to
be low. Certainly the defendant could attempt to
settle the case with the plaintiff, but the plaintiff
could always refuse. Therefore, in the case of an
intractable plaintiff, a defendant would be forced to
continue to incur attorney’s fees no matter what it
deemed the amount in controversy to be. Here,
[Kessock] asserted that [his] claim was worth more
than $1,000,000. Therefore, there is no evidence
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that [Kessock], who ultimately did proceed with this
case through trial, would have agreed to settle the
case for a nominal amount. Notwithstanding the
foregoing, to the extent this test is applicable to the
case at bar, the [c]ourt determines that the fees
requested by Conestoga are reasonable under the
elements of the Neal test.
Decision with Findings of Fact and Conclusions of Law, 8/17/17, at 16–17.
On appeal, Appellants complain that Conestoga litigated the dispute for
eight years without ascertaining the amount of money in dispute, only to admit
contractual liability at trial. Appellants’ Brief at 31–33. However, the trial
court assessed attorney’s fees as of Attorney Clemm’s involvement in the
case, which began in March of 2013, four years after Kessock filed his lawsuit
against Conestoga. N.T., 5/1/17, at 140. During his representation, Attorney
Clemm defended Conestoga against Kessock’s claim and pursued Conestoga’s
cross-claims against Appellants; both lawsuits arose out of the incomplete title
search. Id. at 113–114. Thus, we discern no merit to Appellants’ first two
bases for challenging the trial court’s award of attorney’s fees to Conestoga.
Appellants next assail the trial court’s failure to exclude inadmissible
hearsay about attorney charges for individuals who did not testify, i.e., Joshua
Knepp (“Attorney Knepp”) and Katie Clemm. Appellants’ Brief at 35.
Specifically, Appellants contend that the “compilation of individual time entries
spanning the four years that the Clemm Firm handled this case . . . are
hearsay within hearsay,” proven for the truth of the matter asserted. Id.
(citing Pa.R.E. 801). Relying on the “recorded recollections” hearsay
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exception,5 Appellants argue that, because Attorney Knepp and Katie Clemm
did not testify at trial, Conestoga failed to prove all charges related to their
time entries. Id. at 35–36 (citing Pa.R.E. 8803.1(3)). Therefore, Appellants
conclude, the award of attorney’s fees should be reduced by the amount of
Attorney Knepp’s and Katie Clemm’s billings. Id. at 36.
In response, Conestoga argues for admissibility of the invoices under an
exception to the hearsay rule known as “Records of a Regularly Conducted
____________________________________________
5 This hearsay exception provides as follows:
The following statements are not excluded by the rule against
hearsay if the declarant testifies and is subject to cross-
examination about the prior statement:
* * *
(3) Recorded Recollection of Declarant-Witness. A
memorandum or record made or adopted by a declarant-witness
that:
* * *
(B) was made or adopted by the declarant-witness when the
matter was fresh in his or her memory; and
(C) the declarant-witness testifies accurately reflects his or her
knowledge at the time when made.
If admitted, the memorandum or record may be read into
evidence and received as an exhibit, but may be shown to the jury
only in exceptional circumstances or when offered by an adverse
party.
Pa.R.E. 803.1(3).
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Activity.” Conestoga’s Brief at 26 (citing Pa.R.E. 803(6)).6 According to
Conestoga, Attorney Clemm was “an authenticating witness” who provided
“sufficient information relating to the preparation and maintenance of the
records to justify a presumption of trustworthiness for the business records of
a company.” Id. (citing U.S. Bank, N.A. v. Pautenis, 118 A.3d 386, 401
(Pa. Super. 2015)).
Upon review of the record, we observe that, at trial, Appellants objected
to the admission of any evidence related to Attorney Knepp’s time; however,
they did not object to evidence related to Katie Clemm’s time. N.T., 5/1/17,
at 40–42. Therefore, Appellants’ challenge to the admissibility of evidence of
____________________________________________
6 Rule 803(6) permits the admission of a recorded act, event or condition if:
(A) the record was made at or near the time by—or from
information transmitted by—someone with knowledge;
(B) the record was kept in the course of a regularly conducted
activity of a “business”, which term includes business, institution,
association, profession, occupation, and calling of every kind,
whether or not conducted for profit;
(C) making the record was a regular practice of that activity;
(D) all these conditions are shown by the testimony of the
custodian or another qualified witness, or by a certification that
complies with Rule 902(11) or (12) or with a statute permitting
certification; and
(E) neither the source of information nor other circumstances
indicate a lack of trustworthiness.
Pa.R.E. 803(6).
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Katie Clemm’s time is waived. See Folger v. Dugan, 876 A.2d 1049 (Pa.
Super. 2005) (challenge to admissibility based upon improper authentication
is waived where party failed to object on that basis at trial).
As to the evidence of Attorney Knepp’s time, we conclude that Attorney
Clemm proved the criteria for admission of his firm’s invoices under Pa.R.E.
803(6). The record confirms that Attorney Clemm was president of the law
firms that represented Conestoga. N.T., 5/1/17, at 116. His associate,
Attorney Knepp, used the Time Slips program for recording time “every six
minutes of every hour of every day that they worked on a case.” Id. at 115,
131. Attorney Clemm supervised Attorney Knepp’s work on this case, and he
reviewed Attorney Knepp’s time records on a monthly basis. Id. at 116, 134–
135, 142–143. The records were then submitted to the bookkeeper who
generated the worksheets. Id. at 115, 137. Once Attorney Knepp reviewed
the worksheets for accuracy, the bookkeeper generated invoices and sent
them to the client. Id. at 116, 135, 137–138. Nothing in the record indicates
a lack of trustworthiness in the source of information or other circumstances.
Pa.R.E. 803(6)(E). Moreover, the trial court made a credibility determination
as to Attorney Clemm’s testimony, and we detect no reason to disturb it.
Decision with Findings of Fact and Conclusions of Law, 8/17/17, at ¶ 61.
Based on the foregoing, we discern no merit to Appellants’ claims that the trial
court abused its discretion in admitting all of the attorney invoices in support
of Conestoga’s claim for attorney’s fees.
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Appellants further assail the trial court’s failure to exclude charges
related to enforcing the Agency Agreement. Appellants’ Brief at 37. We
dispose of this issue by adopting as our own the well-reasoned analysis of the
trial court:
2 Delancey argues that attorney’s fees attributable
to enforcement of the Agency Agreement itself
should be interpreted as excluded from [paragraph
5]. The [c]ourt, however, is not persuaded. First,
the plain language of the contract does not so limit
the recovery of attorney’s fees. Fees related to
enforcement of the Agency Agreement by definition
“result from” Delancey and its agents’ negligence.
But for Delancey’s agents’ negligence, Conestoga
would not have incurred legal fees enforcing its
agreement with Delancey.
Delancey cites only two cases to buttress their
argument, Twnshp of Millcreek v. Angela Cres Trust
of June 25, 142 A.3d 98, 956 (Pa. Commwlth. 2016);
Neal v. Bavarian Motors, Inc., 882 A,2d 1022, 1032
(Pa. Super. 2005). However, both cases are readily
distinguishable from the present matter. These
cases relate to statutory attorney’s fees as opposed
to attorney’s fees provided for in a contract. This is
important, because in both cases, the court held that
the attorney’s fees sought were not actually
provided for in each statute. In Twnshp of Millcreek,
attorney’s fees were not awarded because the bills
submitted for reimbursement were pursuant to a
proceeding for which reimbursement of attorney’s
fees was not provided for by statute. Twnshp of
Millcreek v. Angela Cres Trust of June 25, 142 A.3d
948, 956 (Pa. Commwlth. 2016). Similarly, in Neal,
attorney’s fees were not awarded because they were
sought under a cause of action for which
reimbursement of attorney’s fees was not provided
for by statute. Neal v. Bavarian Motors, lnc., 882
A.2d 1022, 1032 (Pa. Super. 2005). In short,
Delancey has presented no case law which would
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cause this [c]ourt to look past the clear wording of
the Agency Agreement.
Decision with Findings of Fact and Conclusions of Law, 8/17/17, at 16 n.2.
Finally, Appellants complain that the trial court failed to exclude
amounts billed as attorney’s fees for work done by a paralegal. Appellants’
Brief at 39. Appellants contend as follows:
Conestoga expended $3,412.50 for the activities of Katie
McKenzie Clemm between March 26, 2015 and October 13, 2015.
Ms. Clemm’s time was charged at an hourly rate of $175.00. Ms.
Clemm’s name appears under the title of “Lawyer” at the header
of each description.
However, Ms. Clemm was not admitted to the practice of
law in Pennsylvania until October 19, 2015. After Ms. Clemm’s
admission to the bar of Pennsylvania, her time was charged at the
same hourly rate of $175.00.
The entire amount of $3,412.50 falsely billed as attorney
time for an individual not licensed to practice law in Pennsylvania
should be deducted from amounts attributable to [Appellants].
Appellants’ Brief at 39 (citations to reproduced record omitted).
Conestoga counters that Ms. Clemm’s paralegal rate of $175 per hour
“reflect[ed] a reasonable rate charged by a senior, highly experienced
paralegal. After Ms. Clemm was admitted to practice in the Commonwealth
of Pennsylvania, her rate remained at the same rate of $175 per hour which
reflected a reasonable rate charged by a young associate with her level of
experience.” Conestoga’s Brief at 31 (citing N.T., 5/1/17, at 117).
The crux of Appellants’ argument is that Ms. Clemm’s status was
misrepresented under the heading of “Lawyer” while she was still a paralegal.
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N.T., 5/1/17, at Exhibit D-9. In light of the record before us, we consider this
argument disingenuous. At the trial on damages, William Parker, Conestoga’s
Vice President of Claims and Underwriting, testified that his negotiations with
Attorney Clemm’s firm for representation “took into account whether it’s a
billing for a paralegal, whether it’s a billing for an attorney.” Id. at 72–73.
He further testified that part of Conestoga’s original memorandum of
understanding with Clemm and Associates “was that [Ms. Clemm] would be
working on the case as well at the hourly rate of [$]175.” Id. at 73.
Conestoga considered the bills received from Attorney Clemm’s firm to be fair
and reasonable. Id. at 74.
Additionally, Attorney Clemm described Ms. Clemm’s status as follows:
And also [Ms. Clemm] working at the firm as well. I think
[she] started working on the file in March of 2015. And in my
estimation, it was appropriate to bill [her] out at $175 an hour at
that time. Because as a third year law student you were far more
experienced than any paralegal would have been under similar
circumstances. So the $175 an hour was a rate which reflected
that.
And after [she] passed the bar, I think in October of 2015,
then I elected not to increase [her] rate because [she was] being
at that point slightly underpaid as a first year associate in terms
of the hourly rate being charged. But I thought it was appropriate
to continue that particular rate, based upon [her] age, experience,
et cetera. And that was something which was approved by the
company, it was understood by the company and agreed to by the
company.
N.T., 5/1/17, at 117–118. As observed above, the trial court considered
Attorney Clemm’s testimony to be credible, and we detect no basis on which
to overrule its determination. Decision with Findings of Fact and Conclusions
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of Law, 8/17/17, at ¶ 61. Therefore, we discern no merit to Appellants’ final
basis for challenging the award of attorney’s fees.
In sum, Appellants have failed to persuade us that the trial court erred
in finding in favor of Conestoga on its cross-claim for attorney’s fees pursuant
to the Agency Agreement and the Guaranty. Therefore, we affirm the entry
of judgment against Appellants.
Judgment affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/9/18
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